Menu
https://www.eqjournal.org/?paged=8
Main Sources of Capital for Startups
Posted on
Sunday 5 February 2012
Is lack of access to capital really the main barrier to
entry for most entrepreneurs? I believe that a stated lack of access to
capital by many would-be entrepreneurs is more of an excuse than
anything else. There is lots of funding around for passionate
entrepreneurs who can execute on a good biz model.
Here is my (absolutely unscientific) bar chart of what I think are
the main sources of capital for startups. (I’ll leave it to a future
grad student to prove it or disprove it.)
Home Equity Loans
********************************************************************************************
Soft Capital/Co-Guarantor/Family Savings & Investment/Friends, Family, Fools #
************************************************************************************
Supplier Credit
***************************************************************************
Consulting
***********************************************************************
Pre-sales/Launch Clients
******************************************************************
Sweat Equity
***************************************************************
Credit Cards
***********************************************************
Deposits, Retainers, Advances, Progress Payments ##
*******************************************************
Receivables Factoring/Collecting Early & Pay Late/Cashflow
****************************************************
Financial Leasing
*************************************************
Partners/Debentures/Partner or Company Loans/Limited Partnerships/Share Issues/Debentures
*********************************************
Trading/Speculating/Reselling/Asset Flipping
******************************************
Strategic Investors/Co-opetitors/Borrowed Equipment/Social Capital/Co-branders/Advertisers ###
****************************************
Seller Financing/Seller Take Back Mortgages
**************************************
Banks/Micro Credit
************************************
VCs
********************************
Government Grants/Tax Credits/Government Loan Programs/Foundation Grants & Loans
*****************************
Angel Capital
***************************
Earned Media/Guerrilla Marketing/Negative Cost Marketing
*********************
Franchising/Branchising
*******************
Accretive Buying/Selling
*****************
ESOPS ####
**************
Sponsorships/Rights Fees/Signage
************
Start Your Own Foundation or Not-for-Profit
**********
Patents and Royalties
********
Collectibles Sales
*******
Business Competitions
******
# Mom, Dad, Rich Uncle Buck, co-guarantors
## And Draws
### Investment by competitors, near competitors, future clients and future suppliers
### Employee Stock Ownership Plans
This is just my experience talking—who knows I may be wrong but most
entrepreneurs are, by definition, people without much money. Again, in
my experience, people with money are not entrepreneurs, they are called
‘old money’ and old money anywhere tends not to do very much—it just
sits around collecting coupons not starting new enterprises.
I always laugh when my students in entrepreneurship at the Telfer
School of Management at the University of Ottawa and elsewhere go to a
Bank for the first time and ask for a loan to start a business—and then
get refused because their only ‘collateral’ is their student debt. It
took 2006 Noble Peace Prize winner Muhammad Yunus, formerly of the
Grameen Bank to realize that a bank’s real job is to lend money to
people who need it—a completely novel thought, it turns out.
Dr. Yunus also realized that the way out of poverty for the vast
majority of people on this planet is to become (at least at first) micro
entrepreneurs. In fact, Grameen Bank lends on a priority basis to
people who have the greatest need and the least money! And you know
what? Their loan loss ratio is tiny and they make a profit too.
Canadian Banks would probably prefer to do zero small business
lending. It takes very few bank resources to approve a home mortgage,
give out a credit card or make an auto loan. Banks think nothing of
approving a $350,000 home mortgage—if your credit score (or your Beacon
Score) is high enough—in minutes.
But go to the Bank for a small business loan of $350,000 and you will
find that: a) they need a massive amount of data from you and b) they
need an expensive infrastructure in terms of on-the-ground bank
managers, loans officers, account managers and back office and central
office types to approve your loan application. I believe if it weren’t
for the fact that successive Finance Ministers lean on Chartered Banks
in Canada, they would choose to turn down every small business loan
request.
Prof Bruce
Prof Bruce @ 3:50 pm
Edit This
Filed under:
25 Steps to Business Success
and
Bootstrap Capital
and
Entrepreneur Skill Set
and
Financing
and
Leverage
and
Micro Capital Lending
and
Negative Cost Marketing
and
No Money Down Real Estate Investing
and
Political Economy
and
Pre-selling, Finding New Clients, Keeping Existing Ones
and
Product Management
and
Receivables
and
Sponsorship
No Comments
Financial Leverage: A Simple Model
Posted on
Sunday 5 February 2012
(Is Bootstrap Capital a New Form of Capital?)
(What Occupy Wall Street is Really Complaining About)
Leverage or gearing means using OPM, Other People’s Money, in one of
your projects. Simply put, when your project’s rate of return is higher
than the coupon rate (interest rate) on money you borrowed or used to
capitalize it, you will get positive leverage.
Let’s assume for this hypothetical sample project that its overall
ROR is 12% p.a. This is based on you funding the entire thing with your
equity. Luckily, you have enough cash in your Bank to fund it this way,
if you want to. But do you want to?
Maybe, maybe not. Say instead you are able to borrow half the capital
you need at 6% from a friendly lender, what happens to your ROR on your
equity? It will have increased by half to 18%. That means you can now
use your equity to fund two projects instead of one, producing a huge increase in overall return to you.
Still not convinced? Let’s walk through it once more. Say you buy an
asset for $100,000 in cash (i.e., all equity) that produces $12,000 in
annual net operating income or profit for you. That’s your 12% p.a.
return. But if you instead decide to borrow $50,000 at 6% (interest
only), your return would be $12,000 – $3,000 which would now leave you
with a $9,000 profit on your $50,000 in equity or 18%.
If you did two identical projects, you would now be seeing $18,000
every year on your $100,000 of equity instead of $12,000. Over time,
this is a huge difference and it’s why investors generally own
everything and savers own little or nothing in most nations. It’s why
you see OWS, Occupy Wall Street, everywhere—because the 1% who are
investors own pretty much everything. Depending on your source, the top
1% in the US own somewhere around 42% of all financial assets in that
Republic.
Now what if instead of borrowing the extra money you want
from a lender, you got $30,000 on credit (with no interest) from a
couple of your suppliers and you got another $20,000, this time as
deposits or retainers from a few customers or clients, what happens to
your ROR? It doubles, that’s what, to $12,000 on each $50,000 tranche of
equity you invested so now you are making 24% on your money and $24,000
every year instead of $18,000 (if you borrowed ½ the capital cost
from a lender) or $12,000 if you funded it all yourself. This is big
news.
I believe that Bootstrap Capital is a new form of capital—it
obviously isn’t debt or equity so what is it? It’s not energy or labour
either. It’s not like issuing a bond or shares in your enterprise either
since sources of bootstrap capital have no claim on the ownership or
capital structure of your enterprise.
It’s not sweat equity either. Perhaps you could reduce your capital
requirements by working harder yourself– substituting your labour for
capital. But this isn’t the same either since sweat equity comes with a
significant opportunity cost—you could be doing something else with your
time like working for wages or on another investment opportunity.
Another cool thing about Bootstrap Capital, you usually don’t have to pay it back or at least not all of it.
I think it will one day be recognized for what it is—something
different, part of the ‘magic’ created by a class of entrepreneurs.
Services like kickstarter.com get this—they have created a platform for
creative persons to get funding for their innovative projects without
giving up any equity in their deals or taking on debt because there is
one thing you need to be mindful of—if you borrow money from a
lender/backer/equity holder, they have an expectation that you will pay
them back or make money for them while they are lying on a beach. If you
don’t do that, you are going to make enemies.
Lastly, be careful—financial leverage can and will work against you
if you borrow at rates that are higher than your project’s ROR. This
seems self evident but you might be surprised at how often entrepreneurs
(who have an enormously high personal discount rate and are highly
optimistic by nature) do this.
If your project’s ROR is in fact 12% and you borrow vulture money
(e.g., 2nd mortgage money or finance company debt or credit card debt)
at 15% or even more (credit card debt can easily get away from you—Banks
have a unilateral right to jack up the interest rate on your credit
card whenever they feel like it BTW) thinking that somehow you can
outrun them, you’re sunk before you start.
In the Land of Grassel
I ran a thought experiment last year about an imaginary world called
Grassel—a place made up of 100 rows and 100 columns with 10,000 squares
where four classes of creature live: grasshopper, squirrels, ants and
mensa ants.
Here are the characteristics of the four groups:
1. Grasshoppers are low wage earners who have to spend every cent
they make just to survive. However, each Grasshopper starts life owning
one square in Grassel with an asset value of $13,200. (All figures are
in GD, Grassel Dollars.)
2. Squirrels are mid-income types and even though they have a lot more
income than Grasshoppers, they somehow seem to spend all the Grassel
Dollars they earn on current consumption. The amount they have left over
each year for savings and investment? Zero. But they live on nicer
squares in Grassel with an asset value of $19,800 each.
3. There is a minority population made up of Ants. They are an upper
class folk who make many times what even Squirrels take home so they
have some money left over for savings and investment! But these Ants are
very cautious and don’t want to take any risks so they don’t invest any
of their hard earned money– they save it instead and put it in Grassel
state-backed treasury bills that pay interest at 2% p.a.
4. Finally, we have a minority within a minority– Mensa Ants who make
the same amount of money each year as the rest of the Ant class but they
split their surplus cash between savings and investment.
In fact, Mensa Ants place 90% of their surplus in investments; the
balance they place in financial instruments. Since there is only one
type of financial instrument in Grassel, they have some t-bills on which
they get the princely sum of 2% p.a. in interest.
Grasshoppers and Squirrels are only too happy to sell the squares
they own! Heck, they can use a boost to their cashflow. However, they
don’t save any of the extra cash they get from selling their squares.
And they don’t invest any either! THEY SPEND IT ALL!
The Ants won’t sell the squares they own to Mensa Ants. They’re into
savings and they believe that owning a square is a form of savings for
themselves and their famdamilies.
Of the 10,000 squares in Grassel, Grasshoppers own 3,333, Squirrels
own 6,234, Ants own 333 and Mensa Ants 100 at time, t = 0. The 10,000
squares represent a total asset value of $170,060,000.
Every Grasshopper, Squirrel, Ant and Mensa Ant start out with one
square of Grassel land each. But the gods of Grassel are wondering if
they come back a generation later (20 years on), what will have
happened?
Well, after just 11 years, none of the Grasshoppers own any property
and after 17, the Squirrels get wiped out too. Of course, the Ants still
own their properties since they refused to sell to Mensa Ants and they
didn’t need to so that they could maintain their lifestyle (like the
Squirrels did) or just to pay for the necessities of life (like the
Grasshoppers did). But they don’t have much money either– their savings
don’t amount to much but at least they still have their squares.
This proves that in Grassel: you can’t save your way to wealth, you have to invest your way there.
(For more about Grassel, please see: https://www.eqjournal.org/?p=2760.)
Use of leverage in their investments is what the 1% has been doing to
get where they are. If it works for them and Grassel’s Mensa Ants, so
why not for you and me?
Prof Bruce
Prof Bruce @ 1:47 pm
Edit This
Filed under:
25 Steps to Business Success
and
Development Economics and Entrepreneurship
and
Entrepreneur Skill Set
and
Ethics
and
Future Vision and Technology
and
Investing
and
IRR
and
Leverage
and
No Money Down Real Estate Investing
and
Political Economy
and
Rules? There are no rules in entrepreneurship.
and
Thought Experiment
and
Writing, Research and Experimentation
No Comments
Private versus Public Ownership
Posted on
Saturday 4 February 2012
(Why Starfleet is Wrong)
(Pre-Conditions for Economic Takeoff in Nations)
Private ownership of a ‘thing’ can be viewed as private stewardship
of that thing. As a former owner of a National Hockey League franchise, I
never felt like I owned it and, frankly, I was always uncomfortable
with the notion that hockey players under contract to the team were like
indentured workers, albeit, highly paid ones, who could be traded like
pork bellies. I always felt that I held the franchise in trust for the
fans and the City.
I remember how counter productive it was when (former) West Carleton
Township Council (near Ottawa, Canada) considered in the 1990s passing
rules to control use of private woodlots. These woodlots, most of them
carefully managed by private owners, had remained in continuous
production over a period of time measured in generations. Owners
carefully harvested enough product to feed wood stoves, pulp mills and
board production but not so much that they wouldn’t have an income
stream later because they had clear cut their properties.
The threat of controls superimposed on them by their local Council
caused the exact problem the Township was trying to avoid—some woodlot
owners clear cut their entire acreage in advance of the new rules
becoming law; they feared they would not be able to realize any income
after the rules were passed. This is so typical of government
initiatives—a. governments often create enormous programs aimed at the
whole population of that industry or sector when they are actually
trying to solve a problem that is caused by a tiny percentage of the
population in an industry, b. hence, they penalize the vast majority of
that population without actually solving the problem, c. they often
generate unintended consequences.
Private Ownership => Private Stewardship
If you look at the 80-year rule by the proletariat in the former USSR
(actually, it was rule by nomenclature), you see that ‘public’
ownership produced the worst ecological consequences for our planet—from
dumping old nuclear reactors into Lake Baikal to Chernobyl meltdown,
Russia faces a set of environmental circumstances that will take 100,000
years to deal with.
Can you imagine what the mindset has to be to dump contaminated
nuclear waste into Lake Baikal, which is the oldest (25 million years)
and deepest (1,700m) lake in the world?
“It contains 20% of the world’s total unfrozen freshwater
reserve. Known as the ‘Galapagos of Russia’, its age and isolation have
produced one of the world’s richest and most unusual freshwater faunas,
which is of exceptional value to evolutionary science.” (UNESCO: https://whc.unesco.org/sites/754.htm)
If no one owns a ‘thing’, no one seems to care about it. At least,
that is the western notion and it certainly seems to be a cross cultural
view with perhaps the exception of a few indigenous peoples who may
nurture nature in a collective way.
When watching Star Trek, TNG, I was always struck by Captain Picard’s
view of the Ferengi as something of a sub species because of their
clearly established commercial avarice. Starfleet and the Federation no
longer felt the need to be guided by the individual pursuit of personal
enrichment—I guess they are something like Commune-ists.
Invisible Hand of the Ferengis
As someone who has lived in a commune, I can tell you that communes
are organized in a hierarchical manner, no matter what they may
advertise. As Orwell said: “Everyone is equal, except some are more
equal than others.”
What worries me is how to decide who is more equal than others
without using the scorecard of dollars and achievement—after all,
dollars are democrats. Are we better off with a benevolent dictatorship
like Starfleet making decisions on who gets what rather than using
money, which does not discriminate and is blind to gender, race,
religion or any other form of segregating humans except merit? Perhaps
(to paraphrase Sir Winston Churchill) money, free markets and democracy
form the worst possible system, except for all the others.
Even so-called not-for-profit corporations and charities are required
by statute to generate significant reserve funds to tide them over the
rough patches. A ‘reserve’ fund is just a politically correct term for
‘profit’.
What else does a profit allow? Well, it allows the organization (or
family) to invest in more research and development (or education for
example), as well as better technology and technical methods of doing
things, to implement best practices and much more. Profits are not just
so ownership can have nicer cars, boats and other toys.
If anyone has ever worked for a company that loses money, you already
know it’s no fun. When you want to travel somewhere, say to meet a
client or go to a trade show or go to a conference, guess what? You
can’t.
An unemployed fellow I just interviewed for a JOB with a client of mine said it particularly well:
“It’s possible to have money without fun but it’s virtually impossible to have fun without money.”
So, please, make profits in everything you do—including running say
the Kiwanis Club so you can do more good works for the community (don’t
just call it that).
I met Walt Rostow when he visited Ottawa and enjoyed listening to the
great man hold forth on his ideas about how to establish the
preconditions for economic takeoff in DCs, Developing Countries. Walt
Rostow’s work of the 1950s and 1960s and recent work by Hernando De Soto
and others (I have dared to add in a few of my own suggestions) that
what is needed for economic take-off in DCs today includes:
1. education, especially tertiary education, trades, art and design
2. health care
3. supply of and private ownership of housing (safe, affordable, privately owned)
4. clear title to housing and accurate addressing and surveying
5. tolerance of and legalization of cottage industries
6. tolerance of mixed use neighborhoods where people can work, live, shop, trade, play, entertain all in the same location
7. effective legal system, respect for the rule of law and contracts
8. moderate levels of taxation and avoidance of confiscatory levels of taxation
9. re-integration of black and gray markets (deeding of lands and title in squatter settlements )
10. active capital markets (borrowing circles and financial recycling
of savings and investment, home mortgage and business loan availability)
11. culture of and support for entrepreneurship and innovation
12. wide spread high speed Internet access and effective communications
including wirless systems providing always-on ever present Internet
13. sound public infrastructure
14. extensive private ownership of economy
15. respect for human rights and tolerance of diversity
16. protection of private property rights
17. good, honest and transparent government
18. social peace and harmony
19. strong civic institutions
20. civil defense
21. development of a strong art and design culture as well as support for artpreneurs*
22. trust, courage, hope and faith.
I added the need for a culture of and support for entrepreneurship
and innovation as well as some neo-urbanist planning principles and
support for the arts. I have become convinced that these are important
ingredients to unlocking development potential not only in DCs but first
world countries as well.
Respect for the law including contract law is an important
pre-condition. Former President Bill Clinton, when asked to comment on
why it was taking so long for the ‘new’ Russia to be fully accepted into
the community of trading nations, responded that this would have to
wait until contract law was widely accepted as binding by the people and
institutions of that country. People doing business in Russia in the
1990s needed to carry around briefcases full of USD currency—they
couldn’t rely on Russian banks to ‘give’ back any money they deposited
there.
It’s hard for an economy to takeoff without trust. I have learned as
an entrepreneur that you can have rooms full of legal paper but if the
other side has no respect for a contract, the legalese is generally
pretty useless. Having to go to court to force someone to live up to
their agreement is not only expensive and time consuming, it is soul
destroying too and often futile.
Prof Bruce
Postscript: to read more about some of my thoughts on the Environment, please refer to: https://www.eqjournal.org/?p=81 which deals with a voyage to Earth, population 1.2 billion.
* What role do the arts play in the development of our city-state economies?
What role do these people play in a modern economy–
designers, technologists, graphic artists, architects, musicians,
writers, poets, novelists, dancers, actors, filmmakers, digital media
designers, game makers, visual artists, fashion designers, composers,
painters, commercial artists, lighting designers, jewelry designers,
clothing designers, perfumers, playwrights, martial artists, sign
makers, floral arrangers, sound engineers, industrial designers, hair
and makeup specialists, shoemakers, culinary arts, interior designers,
urban designers, GUI designers, directors, producers, cinematographers,
photographers, foley artists, story tellers, magicians, pyrotechnicians,
costume designers, set makers, singers, sculptors, furniture and
cabinet makers, glass blowers, potters, graffiti and mural artists,
horticulturists, gardeners, landscape designers, performance artists,
cartoonists, caricaturists, editors, curators, scriptwriters,
calligraphers, comics, doll and toy makers, instrument makers,
screenwriters, printers, videographers, choreographers and many other
professionals, too many to list here?
Question: WHO NEEDS ‘EM?
Answer: WE ALL DO!
What would life be like without the arts? Can your city compete in a
global marketplace without a strong arts community? Answers: horrible
and no.
@ProfBruce
Prof Bruce @ 11:06 am
Edit This
Filed under:
Art and Architecture
and
City Planning
and
Design Economics
and
Development Economics and Entrepreneurship
and
Future Vision and Technology
and
Livable Cities and Neo-Urbanism
and
Political Economy
and
Work/Life Balance
and
Writing, Research and Experimentation
No Comments
Goal Setting and the 1992/93 Ottawa Senators
Posted on
Saturday 4 February 2012
(Which Team was the NHL’s Worst Ever? The 1974/75 Washington Capitals and I Can Prove It.)
Goal setting is an important part of future success for would-be
entrepreneurs. Enterprises that set goals and track their metrics are
growing at 7x the rate of enterprises that don’t according to a Silicon
Valley study published in May of 2011 called Startup Genome Report 01 by
Max Marmer, Bjoern Lasse Herrmann, Ron Berman, 2011, https://www.eqjournal.org/Startup_Genome_Report.pdf.
When we first brought the Senators to Ottawa, I set a very public
goal that we would get 22 points that first season—I told the media, the
players, the coaches, everyone that that was our goal for the year.
Now why did I choose 22 instead of say 30 or some other number?
Because the worst ever team in NHL history (the 1974/75 Washington
Capitals) got 21. I wanted to avoid the ignominy of being the worst ever
NHL team and, once I told the players and coaches that, they did too.
Does anyone remember what our point total was in our first year? 24.
We were fortunate to get 24 points instead of 22 because we had an 84
game season instead of the 80 which the Caps played. So if we had
actually ended up the year with 22 points, this would have given us a
winning percentage of .130952. The Caps winning percentage was .13125,
better than ours by .0002976 so perceptive fans would have argued that
the Sens were in fact the worst team ever.
I know some of the Caps players from that era and trust me they are
hoping some team shows up that is worse before they die. They hate the
fact that now in middle age, fans will still say things to them like
this: ‘Oh, you were on that team. Weren’t you guys the NHL’s worst ever?’
Our winning percentage from 1992/93 ended up being .142857 a healthy .011607143 better than theirs.
I believe that if you set your goals, if you visualize them, if you
internalize them, if you can see yourself achieving them, you have a
great opportunity to be successful. I suggest to all student
entrepreneurs that they write a simple equation everywhere—their homes,
their offices, wherever they can see it: N = ? where N is number of
clients, customers, visitors, revenues, patients, donors,
sponsors…anything that measures performance of their organizations. It
seems simplistic but if everyone in your organization buys-in to a
single goal and all efforts are focused on achieving that, you will.
Prof Bruce
Prof Bruce @ 9:35 am
Edit This
Filed under:
25 Steps to Business Success
and
Entrepreneur Skill Set
and
Goal Setting
and
Rules? There are no rules in entrepreneurship.
No Comments
Entrepreneurs Handbook II: Dedication
Posted on
Saturday 4 February 2012
(Includes ten guiding principles that every startup in Sir Terence Matthews’ stable of companies must follow, aka ‘Terryisms‘)
I want to dedicate Entrepreneurs Handbook II, first, to my late
father, Professor O. J. Firestone—entrepreneur, professor, economist,
art collector, author, Royal Commissioner on Medicare, public benefactor
and generous parent.
It is also dedicated to my former colleagues at Terrace Investments
Limited, original parent company of the Ottawa Senators, who lived these
many lessons with me and my students, clients, suppliers and staff who
sharpened this material by being willing and sometimes unwilling
passengers on the bus.
Furthermore, I wish to acknowledge here my PhD Supervisor, the late
Professor Max Neutze, Head of the Urban Research Unit of the Australian
National University. He made me a better writer by first telling me (and
scaring the heck out of me) that if I wrote my PhD thesis at the same
level as my Masters thesis (of which I was inordinately proud), I would
not be successful at the ANU and then by editing every word of my 450
page PhD thesis. He provided an example of professional writing at the
highest level—concise, eloquent and sparse—every word was meaningful.
He also told me: “Don’t worry, Bruce, the first million words are the toughest.”
It’s like everything else, you have to practice…a lot. As Malcolm Gladwell says in his book, Outliers, everyone requires at least 10,000 hours to get good at practically anything.
Listen to what Steve Nash, Canada’s greatest roundball player and two time NBA MVP, has to say on the subject: “A professional is a person who gets up to practice the day after the greatest game of their lives.”
Last summer, I completed the first draft of my manuscript for Book 1
(Quantum Entity*) of my sci-fi trilogy that I had storyboarded over the
previous eight months. It is approximately 150,000 words although it
will be somewhat shorter after my editor, the incomparable gentleman
Murray McGregor, gets through with it in the Spring of 2012. As an
aside, do you know what makes a great writer? A great editor.
(* If you are interested, you can read the Foreword for QE here: https://www.eqjournal.org/?p=2932.)
Anyway, entrepreneurs, intrapreneurs and artpreneurs need to bring
not only talent to what they do but focus, effort and years of practice
too. They need to be intensely passionate about their craft in order to
be successful at it; you’re either all-in or you’re nowhere.
Alanis Morissette at 17 was honourary captain of the Ottawa Senators
first year team and an ‘overnight success’ that year (1992/93) as well,
selling millions of CDs. She was a perky, cheerful, talented person and
was everything the Sens could have wanted for that role. But what some
people forgot was that she had been performing in public since she was a
little girl and had at least 10,000 hours of practice in her before her
‘overnight success’. She was a hard worker.
So here is my SCHEDULE that I, as a part time novelist, kept to
complete QE as I did all the usual things I am responsible for in my day
job too, like being Entrepreneur-in-Residence at Telfer School of
Management (now Entrepreneurship Ambassador there), Executive Director
of Exploriem.org, Real Estate and Mortgage Broker at Century 21 Explorer
Realty Inc. and, of course, peerless husband and father of five great
kids:
-Go to bed at 10 pm on a weekday
-Get up at 2 am
-Write until 7 am
-Do yoga and run on treadmill from 7 to 7:45 am
-Go to at least 1 of his day jobs
-Get home at 6 pm
-Be with famdamily until bedtime
-Repeat until weekend arrives
-Get home 6 pm Friday
-Be with famdamily until bedtime
-Get up at 2 am Saturday
-Start a hackathon session that will last until Monday at 7 am with
sleep periods lasting between 10 minutes and a maximum of 2 hrs
-Wake up because new ideas are flooding your conscious mind from the subconscious
-Repeat every weekend until after a 5.5 week sprint beginning to end, first draft of Quantum Entity is completed
-Eat sparingly during this entire process, no more than twice a day
-Occasional glass of red wine indicated to ward off heart attack and turn mind off for brief periods
-Crash for 10 hours
-Get up and go to work!
So talent is nice to have but without focus and hard work, you won’t
get anywhere. I had a chance years ago to sit down with Sir Terence
Matthews (billionaire founder or co-founder of Mitel, Newbridge (now
part of Alcatel), Dragon Wave, Bridgewater Systems, March Networks,
Wesley Clover and dozens more enterprises in tech and real estate).
I was congratulating him on growing Newbridge to a few hundred
million in sales and having $70m or so in cash on their balance sheet in
just five years. “You’ve built a great business, Terry,” I naively said.
Frowning, he answered: “It’s not a great business, Bruce, but it will be. It takes seven to 12 years to create a great buinsess.”
So while it takes Terry seven to 12 years, it’s probably going to
take you and me longer. I tell student entrepreneurs (and, by the way,
we are all student entrepreneurs—it’s a field where you can never stop
learning, growing or changing) that if you want to learn how to get rich
quick, leave now. I don’t know how to get rich quick and I am pretty
sure that you have better odds of getting rich quick by buying lottery
tickets than you do in professional practice or business.
Here are the ten guiding principles that every startup must follow in
Sir Terry’s stable of companies. These are called ‘Terryisms‘ by
everyone living inside the Matthews’ bubble:
1. Form an early (and lasting) attachment to the customer.
2. Follow the fastest (least effort) route to revenue.
3. Pursue only those goals that are consistent with the overall objectives of the enterprise.
4. Stay team focused—superstars must park their egos at the door.
5. Follow your mentor’s advice.
6. Create a great biz first and cool tech second.
7. Keep your costs down.
8. Leverage the investment with government grants and OPM, Other People’s Money.
9. Follow a global mandate from the get go—Canada is too small a market to be the primary focus.
10. Not only should you go after every geography, you also want to go after every vertical.
When a team proudly reports to Terry that they have met their
quarterly sales goals, Matthews ‘berates’ them for not having doubled or
trebled it.
They leave quite chastened.
Whatever, the formula seems to work: every dollar invested in this
group of companies over the last 30 years, has returned $13. Thank you,
Sir Terence.
During my career, I have worked with several thousand entrepreneurs
and student entrepreneurs and, at last count, launched or helped launch
168 companies including two not-for-profits: Ottawa Senators Foundation
(also a charity) and Exploriem.org (focused on teaching, research and
mentoring of entrepreneurs and intrapreneurs).
This Handbook is dedicated to all of these people—I have learned as much from them as they have from me, maybe more.
Lastly, I must thank my wife, Dawn, co-astronaut on my
entrepreneurial journey through life, my mother-in-law, Cora MacMillan,
another one of my heroes and my five kids who put up with me and
encouraged me in good times and not so good times then good times some
more.
Prof Bruce
…
ps. to read the Handbook’s Foreword, please refer to: https://www.eqjournal.org/?p=3179.)
Prof Bruce @ 7:35 am
Edit This
Filed under:
Entrepreneur Skill Set
and
Work/Life Balance
and
Writing, Research and Experimentation
No Comments
Raising Capital by ‘Issuing’ Script
Posted on
Thursday 2 February 2012
(Plus Tapping Sponsors/Co-Branders/Strategic Investors and Partners for Free Capital)
There’s nothing new about raising money by issuing script. The
Reynolds Brothers ran a sawmill (established in 1870 by Orson L.
Reynolds) in the Adirondacks that in addition to central logging and
operating their mill also ran a company store and developed other
sources of income including catering to boarders as well as selling
merchandise to loggers in logging camps. (Source: Reynoldston, New York,
History of a Mill Town).
When they needed to raise money, they issued their own ‘currency’
called script like the $5 promissory note I show below to pay their
bills or to fund new ventures or additions to existing ones.
The script says it is: ‘Due to the Bearer…In Trade At…’ What that
means is that the bearer of the script cannot redeem it for cash, i.e., a
sovereign banknote of the nation (the United States of America). The
fact that it is redeemable only ‘In Trade’ is key. Presumably, Reynolds
has a margin on each trade so a $5 note with a GPM (Gross Profit Margin
of say 40%) only costs them $5/(1 + .4) or $3.57. It’s a good deal for
Reynolds but is it a good deal for a supplier, equipment maker or
labourer who accepts script instead of banknotes?
The answer is: it depends. If you can’t get any other work, $5 in
credit at a Reynolds Company Store, $5 in cigarettes or candy from a
Reynolds vendor (which you could then trade for other stuff) or $5 in
Reynolds products (milled lumber) might be better than watching your
family starve or having you join them in that unfortunate predicament
circa 1876 even if you know in your heart of hearts that it’s only
really worth $3.57.
Conn Smythe built Maple Leaf Gardens in a six-month period during the
Great Depression (1931) at a cost of $1.5 million. He funded it partly
with script. If the ‘Carleton Street Cashbox” as it later became known
had not lived up to its name, that script might have become valueless.
Nevertheless, for an out-of-work ironworker back in the day, it beat
unemployment. They could always find someone in the gray market to take
script off their hands (at yet another discount) so they could eat
today. It is what it is.
Canadian Tire issues script (CDN Tire money) that can only be
redeemed at their stores. Disney issues Disney Dollars at the exchange
rate of $1 DD = $1 USD. They can be converted back to US currency but
only at Disney Parks. Hardly anyone does that and Disney has several
billion dollars of DD on its balance sheet where they sit as liabilities
lest a horde of grandkids and their grandparents suddenly show up at
their theme parks clutching millions of DD they found moldering in their
parents’ sock drawers.
Don’t think that script is relevant to you? Think again. What are
gift cards really? The lesson was not lost on Tracey Clark owner of fair
trade coffee house, Bridgehead in Ottawa where she issued several
million dollars of script to help fund her recent $15 million expansion.
She is building a new HQ for her growing coffee empire and new factory
in a trendy part of Ottawa.
Tracey is a cautious, conservative entrepreneur who bought the assets
and name from a bankruptcy trustee years ago and has painstakingly
built a successful chain of coffee houses in Ottawa. She has an aversion
to debt but not script.
Her customers bought script in denominations of $250, $500 and $1,000
to help her get this expansion done. It’ll open later in 2012. Now why
would they do that? Because: 1. they love Bridgehead coffee, 2. they
love the ambiance of her stores and free wi-fi, 3. the fact that she is
local and able to stack up to and compete with mega chains, 4. she’s an
underdog, 5. they want to feel like they helped make it all happen, 6.
they trust her. But there’s another reason– they get a 20% return.
How’s that? Tracey gives them $1.20 worth of trade value on every
Bridgehead Dollar. That’s a lot better than putting a $1,000 into a
savings account and getting .7% p.a. It’s true, on $1,000 in a Bank
savings account today, you’ll get $7 in interest for the year. If you take off Bank fees, it’ll be obvious that you are paying your Bank to take your money from you.
Now what about Tracey? Say her GPM is .6. The cost of $5 in script is
them 5 x 1.2/(1+.6) or $3.75 so you can see Tracey’s cost of capital
for expansion acquired this way is a negative $1.25 per every
$5 raised. Negative perspiration for Ms. Clark. Now try getting that
kind of deal from your Bank where they lend you money at interest rates
less than zero. Not going to happen.
Recently, I met with Andrew Craig owner of Major Craig’s Chutney who,
like the gentleman he is, recently acted in Quantum Entity Short Film.
(The film will be released in May 2012 and you can read the Foreword of
the Book at: https://www.eqjournal.org/?p=2932.) He’s a true volunteer for the acting gig not a voluntold, really.
He told me the backstory on his three year old business. Turns out
his great, great grandpappy served with British forces in India circa
1884. While there, Major James Craig experimented with ingredients and
cooking methods for all kinds of chutneys and brought those with him
back to the British Isles where a subsequent generation somehow found
their way to the wilds of northern shelf Canada and brought the knowhow
with them and the written recipes waiting to be rediscovered by Andrew
in 2009. Thus was https://www.majorcraigs.ca/ born– if you need North India, Cranberry, Jerk, Butternut and Beer (yum) chutneys, well, now you know where to go.
Andrew came to see me today and, well, it’s a pretty tiny business.
He needs a bit of capital to expand and he can’t take on any debt or
partners (it’s a PB4L, Personal Business for Life). Why no debt? Cuz he
can’t yet support any. Why no partners? Cuz if he has a partner (or
takes on any debt) it won’t be long before either the partner owns his
family recipes or the debt holders do (i.e., the Bank or other lenders).
So what’s a progeny of Major James Craig to do nearly 150 years
later? Issue script and find strategic partners and sponsors, that’s
what.
His clients, distributors, food prep supplier, his label printer, his
ingredient growers, he has a lot of people in his business ecosystem
who want him to grow and succeed. If he issues script to them in $25,
$50, $100, $200 and $500 amounts with a premium of 15 to 20%, that’s a
pretty good deal for them and even better deal for him– same as for
Tracey Clark.
There is some other cool stuff Andrew can do to raise more ‘free’
money. If you look at the image below, you’ll see that strategic
partners are everywhere, you just have to see. It was there
staring poor Andrew in the face all the time. He was looking but not
seeing. One of his suppliers is fast-expanding Beau’s Brewing. There,
right there on the label! How much are they paying Major Craig to be
co-branded this way? Nothing.
That has to change. What I want Andrew to do is put five strategic
partners on his label, his new website (when he raises the ‘free’ cash
to build a decent site) and in his nice Xmas gift boxes (see the last
image I have included near the end of this post) which are perfect
vectors to carry his strategic partners’ messages to his clients– things
like teensy recipe books, coupons, tickets, biz card, promo items, what
have you.
How much of his equity does he give up to get their sponsorship money? Zero.
How much interest are they charging him to give him their dough? Zero.
In fact, he doesn’t even have to repay the money since it is a
sponsorship/marketing/advertising cost to them, i.e., an expense. Truly
free money for Andrew.
For more on this subject, please read: How to get Sponsors for Practically Anything (https://www.eqjournal.org/?p=1649) and Strategic Investors (https://www.eqjournal.org/?p=2406).
One other note I should add. I suggested to Andrew that he sign up
his sponsors for two years. He just isn’t going to have time to start
over every year at ground zero. He will also give his sponsor partners
an option on a third year at the same cost provided they exercise that
option at least 6 months prior to the end of the term of their
agreement. After that, if he is as successful as we hope, the price will
increase so this is a big benefit to his sponsors. (For more on
non-linear selling please refer to: https://www.eqjournal.org/?p=25.)
Lastly, Andrew can use his Xmas packaging as a vector to deliver his
sponsor messages. In a way, he could learn something from
LooseButton.com: they deliver their monthly Luxe Boxes to subscribers
and get paid on three sides of their biz model. See: https://www.eqjournal.org/?p=2748.
Or he could do worse than copy the Manpacks.com biz model– they
managed to turn products (men’s underwear, cologne, razor blades, etc.)
into a service by delivering their stuff monthly or quarterly or semi
annually and developing a nice recurring revenue model for themselves.
See Manpacks and the Tipping Point, https://www.eqjournal.org/?p=2455.
Regular chutney delivery service anyone?
Prof Bruce
Prof Bruce @ 9:07 pm
Edit This
Filed under:
25 Steps to Business Success
and
Asymmetric Information
and
Bootstrap Capital
and
Bootstrap Entrepreneurs– Case Studies
and
Build and Hold
and
Business Models
and
Co-opetition
and
Entrepreneur Skill Set
and
Financing
and
Franchise and Concession
and
Leverage
and
Payables
and
Personal Business for Life, PB4L
and
Political Economy
and
Pre-selling, Finding New Clients, Keeping Existing Ones
and
Product Management
and
Rules? There are no rules in entrepreneurship.
and
Sell
and
Sponsorship
No Comments
How Do I Beat The Competition
Posted on
Wednesday 1 February 2012
Professor Carlisle Adams at the University of Ottawa’s
Faculty of Engineering challenged me to train his second year class on
how they can build world class enterprises in a tough competitive world
and then sustain them. In an hour and a half no less.
Case studies I use include: Rick Hunter’s Mont Cascade and Pro Slide,
Tony Hsieh’s Zappos, Ray Cao and Aditya Shah’s Loose Button and the
Ottawa Senators and Palladium (now Scotiabank Place).
You can read more about Loose Button at: https://www.eqjournal.org/?p=2748 and also download the entire slide deck as a .ppt file from: https://www.dramatispersonae.org/HowDoIBeatTheCompetition.ppt.
I have included as well a ‘pop quiz’ at the end and, conveniently,
the answers right after that. You can also download these from our
server: https://www.dramatispersonae.org/HowDoIBeatTheCompetitionQuiz.doc and https://www.dramatispersonae.org/HowDoIBeatTheCompetitionQuizAnswers.doc.
Prof Bruce
Prof Bruce @ 7:18 am
Edit This
Filed under:
25 Steps to Business Success
and
Bootstrap Capital
and
Bootstrap Entrepreneurs– Case Studies
and
Business Models
and
Competition
and
Corporate Culture
and
Customer Service
and
Differentiated Value
and
Entrepreneur Skill Set
and
Franchise and Concession
and
Internet– the Internet is Eating a Hole in the Global
and
Marketing
and
Mentoring
and
Negative Cost Marketing
and
Negative Cost Value Proposition
and
Not-For-Profits
and
Personal Business for Life, PB4L
and
Pixie Dust
and
Political Economy
and
Pre-selling, Finding New Clients, Keeping Existing Ones
and
Pricing is an Art
and
Product Management
and
Rules? There are no rules in entrepreneurship.
and
Sell
and
Value Differentiation and ‘Pixie Dust’
and
Value Proposition
No Comments
Ghost Scene
Posted on
Monday 30 January 2012
(Plus Comment on Bill Murray’s Solution to His Information Theory Problem in the Film, Groundhog Day)
I recently re-watched the 1990 film Ghost with Patrick
Swayze as a young banker murdered before his time, Demi Moore as his
love interest, Molly Jensen, the incomparable Whoopi Goldberg as psychic
Oda Mae Brown and Tony Goldwyn as junior banker Carl Bruner, Sam’s
erstwhile best friend.
This is a chick flick. I have to admit I’m a sucker for romance so
I’ll sit and watch these films from time to time especially when I can’t
sleep and everyone in my famdamily is sleeping so I can be alone and NO
ONE NEED EVER KNOW! It’s like women CEOs or women with PhDs in English
Lit who secretly read Harlequin Romance novels. No harm done as long as
no one finds out!
The scene that interested me this time around is when Oda Mae comes
to visit Molly to tell her that her shot lover is now a ghost that only
she can hear. The problem? How do you convince a skeptical audience of
one that you really are who you say you are?
Sam tells Oda Mae secret things like the color of Demi’s favorite
underwear and other things that presumably only he could know. This is a
non trivial problem. Challenge yourself: how could you convince your
girlfriend or boyfriend or spouse that you have come back channeled
through another person’s mind? Not easy, right?
It really is the ultimate in terms of encryption/decryption problems.
Information is originating from a source that cannot be traced (i.e., a
ghost) or authenticated. So I solved it. I rewrote the scene. See if
you like my solution!
This is an easier problem to solve than the one Phil Connors (played by Bill Murray) has to tackle in the film, Groundhog Day.
Each day is restarted and there is no obvious way he can convey any
information whether written or digitally recorded (audio/video/image
files) from one day to the next. He cannot change anything in the
physical world from one day to the next nor can he alter the memory of
any person other than himself.
This finally gives him the clue that he can, in fact, take
information from one day to the next– in his mind but only in his mind.
Once he realizes this, he is able to effect change in his Möbius strip
looped life. He uses his repeating days to learn how to play the piano
and otherwise better himself. By the end of the film, he plays like
Oscar Peterson. Even better, he gets the girl, the lovely Rita played by
a transcendent Andie MacDowell.
I give writer Danny Rubin huge kudos for developing this storyline;
it’s believable within the context of a time warp that betrays the laws
of known physics. That is, it works. It’s one of the few films where
that can be said to be true (the other is, of course, Back to the Future)
and the film is actually better on a second or third viewing because
the writer and director don’t treat their audience as numbskulls and
their material as a platform for puerile antics by adult actors playing a
group of teenagers.
Now since as I write this it is in fact Groundhog Day 2012, I asked
myself early this morning what I would do in Phil Connors’ place? The
answer is I would write the next great novel using the same technique
that Eli (played by Denzel Washington) used in The Book of Eli.
[Spoiler alert] Denzel memorizes every line of the King James Bible so
that its words and message will not be lost in post apocalypse America
until he can find a safe place to render it into written form again.
Hence, I would write each day and then memorize every line I wrote so
that if I ever did get out of that Möbius strip of a life, I would have
it done. And, good news, I wouldn’t be a day older.
Anyway, here is my re-write of a crucial scene in Ghost accompanied by a new solution for their information theory problem.
…
In the apartment that they shared before his untimely death, Molly is
still totally unconvinced that Oda Mae Brown is actually channeling her
murdered boyfriend, Sam Wheat. Oda Mae seems to know certain facts
about her that maybe she could only have gotten from Sam but there’s no
real way to know that for sure. Perhaps she has some other
source—Molly’s friends or Sam’s or maybe she just goes through their
garbage for some perverse reason of her own. Or perhaps the place has
been bugged and Oda Mae has been listening in to their private
conversations for God knows how long?
‘Oh the horror,’ Molly thinks.
“I’m going to call the police if you don’t leave right now!” Molly says to Oda Mae.
“Look I don’t want this, Molly, any more than you do but Sam won’t
leave me alone until I deliver his message,” Oda Mae responds
stubbornly.
“I don’t care. I don’t want to hear what you have to say. Get out. Get out!”
“Alright, I’m gonna go but you’ll be sorry.”
STAY RIGHT WHERE YOU ARE, ODA MAE. YOU CAN’T LEAVE AND NEITHER CAN I UNTIL YOU DELIVER MY MESSAGE.
“I can’t and she won’t believe me anyway,” Oda Mae says to the invisible Sam.
SHE WILL. TELL MOLLY TO GO UPSTAIRS INTO HER ROOM AND GET A PAD OF
PAPER. SHE’S TO WRITE DOWN A MESSAGE TO ME, TO SAM. I’LL BE RIGHT BEHIND
HER, ON HER LEFT. I WILL READ HER MESSAGE OUT LOUD TO YOU AND YOU TELL
HER WHAT YOU ARE HEARING, OK?
“Molly, Sam has a test for us. Go upstairs to your room, he’ll be
there looking over your left shoulder reading whatever you write down.
He’ll tell me what you are writing; I will hear him in my mind and I’ll
tell you what you wrote, OK?”
“You probably just have a camera hidden in my room or something. You’ve been spying on me. It won’t prove a thing.”
TELL HER SHE CAN WRITE UNDER OUR COMFORTER.
“Sam says you can write under your comforter, it won’t matter.”
Molly looks suspiciously at Oda Mae but now she’s thinking of taking a
risk—she wants to talk to Sam, just once, just once more. She also
thinks that it’s kind of interesting that Oda Mae didn’t tell her to use
her computer which would be much easier to intercept somehow. Maybe Oda
Mae is on the level?
She goes to her room taking her diary with her.
Draping the comforter over her head, the pale translucent light from
her bedside table lamp penetrates the tiny space she now inhabits. Sam’s
head is there peaking through the cover, looking over her left
shoulder.
Dear Diary, she writes.
DEAR DIARY.
“Dear Diary,” says Oda Mae raising her voice so that she can be heard upstairs.
“Hold on Oda Mae. That could just be a good guess,” a now impatient Molly says.
Dear Diary, if only I could talk to Sam once more, just once more.
DEAR DIARY, IF ONLY I COULD TALK TO SAM ONCE MORE, JUST ONCE MORE.
“Dear Diary, if only I could talk to Sam once more, just once more,” repeats Oda Mae.
Sam, is that really you?
SAM IS THAT REALLY YOU?
“Sam, is that really you?”
How can I be sure?
HOW CAN I BE SURE?
“How can I be sure?”
This is unbelievable.
THIS IS UNBELIEVABLE.
“This is unbelievable.”
I don’t believe in ghosts.
I DON’T BELIEVE IN GHOSTS
“I don’t believe in ghosts.”
Oh Sam I love you.
DITTO
“Ditto.”
What did you just say?
DITTO, TELL HER DITTO.
“Ditto, tell her ditto,” says a bewildered Oda Mae.
Why are you here?
I HAVE A MESSAGE FOR YOU.
“I have a message for you.”
What message?
TWO OF THEM.
“Two of them.”
What’s the first one?
THAT I WILL LEAVE AFTER MY WORK HERE IS DONE AND THAT YOU MUST GO ON WITH YOUR LIFE—FIND A NEW ONE.
“That I will leave after my work here is done and that you must go on
with your life—find a new one. Wait. That’s what Molly wrote?” asks a
now completely confused Oda Mae.
BE QUIET, ODA MAE. JUST REPEAT WHAT I SAY.
“Okay, Okay, don’t be so testy.”
Why are you looking over my left shoulder?
IT IS SAID: ‘LET DEATH BE YOUR ADVISOR*’.
“It is said: ‘Let death be your advisor’.”
Am I to die then?
NO. WHEN DEATH LOOKS OVER YOUR LEFT SHOULDER, HE IS HERE TO ADVISE YOU.
“No. When Death looks over your left shoulder, he is only here to advise you,” Oda Mae editorializes a bit.
What was your other message?
THAT YOU ARE IN DANGER.
“You in danger, girl.”
What’s wrong?
I WAS MURDERED.
“I was murdered.”
But why, why you Sam? You never hurt anyone. Everyone loved you, I love you.
I DON’T KNOW WHY. BUT THE MAN WHO SHOT ME DOWN WAS HERE TODAY IN OUR APARTMENT.
“I don’t know why. But the man who shot me down was here today in our apartment.”
What should I do?
TALK TO CARL, HE’LL HELP US. TALK TO CARL!
“Talk to Carl, he’ll help us. Talk to Carl right now! I’m leaving, I
done my job, now everyone have a good life and you, Sam, have a good
death. Bye.”
ONE MORE THING, ODA MAE.
“What’s that?”
ASK MOLLY TO DANCE WITH YOU AND LET ME IN.
“That’s two things, Sam.”
I KNOW. BUT SHE’S MY GIRL AND THIS IS THE ONLY CHANCE WE’LL EVER HAVE.
“Okay. Alright. Molly, Sam is within me or will be in a moment. He wants to dance…with you.”
Molly unshackles herself from the comforter and comes down to their living room once more.
“What shall I play?” she asks out loud.
UNCHAINED MELODY.
“Unchained Melody,” says Oda Mae.
Molly enters the living room and selects this fabulous tune by The
Righteous Brothers on their hulking Wurlitzer Jukebox that dominates one
entire corner of this space. The 45 RPM record begins playing.
(This video should only be viewed by persons 18 or older. NSFO.)
Oda Mae experiences a significant event as Sam’s spirit enters her
body—she is changed—her tone is different, her stature, her stance.
Shyly at first, Molly comes into her arms then as she gets more
comfortable, she nestles into the larger woman’s arms and bosom. Somehow
she can feel Sam’s presence enveloping her.
They dance, passionately locked in a lasting embrace.
…
Prof Bruce
* Let Death be your advisor is a concept we see in many cultures. It
is a way for each of us to prioritize what’s important and meaningful
about our lives. There are many urgent but unimportant things that
clutter up each day. Death can help you de-clutter and simplify things.
Carlos Castaneda used this concept in his books about Yaqui shaman Don
Juan. Here’s another way to say it: MAKE EACH DAY COUNT.
Prof Bruce @ 6:53 pm
Edit This
Filed under:
Art and Architecture
and
Creativity and Value
and
Intellectual Property
and
Thought Experiment
and
Work/Life Balance
and
Writing, Research and Experimentation
No Comments
Entrepreneurs Handbook II: Foreword
Posted on
Friday 27 January 2012
(Here is the Foreword to Entrepreneurs Handbook II, coming out in March 2012. Stay tuned.)
Do you want to learn how to create significant value for yourself and
your family in an enterprise that you own and control—value that can
provide you the freedom and security to realize your lifetime goals?
Then read this Handbook to learn how to bootstrap yourself to success in
the 21st century.
This Handbook is directed toward the great majority of businesses and
startups that are not VC-funded. Instead they are bootstrapped by their
Founders through the many clever ways that entrepreneurs have learned
over the years to extract value from revenue streams and other
opportunities around them. In fact, most entrepreneurs remind me
somewhat of Bilbo Baggins in J.R.R. Tolkein’s novel The Hobbit:
they are barrel riders, perilously perched on top of unstable barrels
rushing down the river of life. It’s tough to get on top and then even
tougher to stay there. The life of an entrepreneur is not for everyone.
What is the number one reason people decide to become entrepreneurs?
A) To make more money? B) To be their own boss? C) Because they can’t
get any other type of work? D) To work fewer hours or have greater
flexibility in their schedule? E) Because they believe they can create
more interesting work for themselves than others can create for them?
Most often, the answer turns out to be E).
Entrepreneurs believe in themselves; they have confidence that they
can create insanely great new products and services and, in the process,
create new enterprises that will outlast them. They are driven to put
their creative energies to optimal use.
Being a successful entrepreneur allows them to exercise greater
control over their own destiny: both professional and financial. Many
people think that having a JOB is more secure but entrepreneurs,
intrapreneurs and artpreneurs think that real security comes from the
skills, knowledge, training, creativity and experience they possess and
they know that anyone can be laid off from any JOB at any time.
One of my former colleagues from the GOC (Government of Canada) was
laid off in the recession of the mid-1990s from what he perceived to be a
super secure position—doing post project reviews to measure if GOC
programs had, in fact, delivered what was promised. He had a PhD in
anthropology and 27 years experience doing post project reviews.
He asked me: “What do I do now? I still have teenagers to put through
university and my 18 months severance won’t last me and my family much
longer than… well, 18 months?”
I suggested that he buy an existing business, preferably a franchise,
because he wasn’t really cut out for the life of an entrepreneur, per
se, and his options, in his 50s at the time, seemed limited to me. He
declined. “I am going to type up my CV and send it out!”
Six months later, de nada. Not a single interview from over 500
submitted CVs. Not even a phone call or email. Absolutely nothing. The
private sector was not apparently crying out for PhDs in African
Anthropology or a 56 year old with loads of experience doing Government
reports, most of which never saw the light of day.
He came back to me for advice. “Buy a franchise,” I advised again.
“Which one?”
“I don’t know. Let’s look around.”
Eventually, we found him a sandwich shop that was losing $3,000 a
month. It was a franchise with a terrific brand in a good location but
terrible management and ownership. Uusally those two things go together.
To me, it spelled opportunity.
To Bill (not his real name) and his other advisors (basically lawyer,
banker and accountant), it was something to stay away from.
But after some persuading, he bought the place for $65,000*—of which
he had to put down 50% in cash while the Seller took back financing for
the balance to be paid off over the next four years without interest.
Bill had to pay monthly principal and interest but there were no
payments during the first six months during which his entire efforts
were directed towards turning the business around.
(Typical restaurants of the type were selling for anywhere from
$145,000 to $350,000 in that period so he got a good deal, assuming he
could turn the business around. Buying any type of business to lose
money or as a ‘tax write off’ is always a bad idea.)
Seller financing is an example of bootstrap capitalization. There is
no bank involved, no angel investor and, obviously, no VC (Venture
Capital) funding either. Bill also has no partners*. The financing is,
in effect, being derived from the business itself and, if Bill can turn
around the operation, he will, in fact, have paid just $32,500 of his
own out-of-pocket cash to own it—the balance is in effect being paid
from the revenue streams of the business itself. A friendly seller or a
desperate one is part of this equation.
(* There are still two chairs in Heaven waiting for the first two
partners to get there and still like each other. If it wasn’t possible
for the two McCain brothers (Harrison and Wallace) to make it (they had a
falling out over succession after decades of being co-CEOs of the
McCain Empire) then you and your partner probably can’t do it either. So
why have one in the first place?)
Next we worked on Bill’s marketing program which basically consisted
of simple ‘Dollar Off’ coupons. He printed a gazillion of these
(remember, this was in the time before Groupon et al) and he did two
things with them: a) he got permission from a neighboring national
retailer to place these under windshields of parked cars from 10 am to
11 am each day (he also promised to come back every evening and remove
any coupons thrown away in the parking lot plus he gave the national
retailer franchise owner a tonne of coupons to give to his employees as
part of their incentive program) and b) he created heaping
platters of freshly cut sandwiches. With these he would visit offices
(around 11 am) within ten kilometers of his store. Just as people were
getting kind of hungry, there would be Bill with a giant platter of
sandwiches and still more Dollar Off coupons.
He has an open, trustable face and in his franchise’s uniform, he
somehow managed to finagle his way past security at most local tech
companies—all they did was waive him past security to ‘deliver’ his
sandwiches. He never asked for permission. Bill is one in a long line of
entrepreneurs who would rather ask for forgiveness than beg for
permission.
He would then run back to his store and watch customers line up…
He not only does his own marketing, but also hires and fires, does
staff training himself, runs his own accounting software, is big in
catering and loves what he does. As long as he keeps a good relationship
with the master franchisor, no one will ever tap him on the shoulder
again and tell him he is too old or not wanted or both.
He owns two shops now and has no plans for any more. His first year
(with his first shop), he netted $30,000 (down from his GOC salary of
around $110,000), his second year, he made $90k, his third, $120k and,
with two shops, he now regularly makes more than $150k. This is his
cash (after paying everything including income taxes) or as my wife
likes to call it, ‘IGA money’, money you can touch, feel and spend.
He told me recently (he’s now in his late 60s): “I never thought I
would earn this kind of money and I never thought I would be as happy as
I am now. I’m gonna do this forever or until I drop, whichever comes
first.”
This simple example has a few lessons:
1. Entrepreneurship is not necessarily riskier than having a JOB.
2. Mentored businesses tend to be more successful than those without a support network.
3. But you need the right mentor—not necessarily a lawyer, banker or an accountant who are not really entrepreneurs anyway.
4. You need to be able to sell to be a successful entrepreneur.
5. Marketing and sales are not the same function and, any time you see
someone with the title ‘VP, Marketing and Sales’, you are looking at
someone who doesn’t know what they are doing.
6. As CEO, Founder, President, Executive Director, Entrepreneur, you can
not delegate or outsource core competencies like marketing, sales,
finance, cashflow management, banking, accounting, business modeling and
HR even if you don’t like one or more of these functions.
7. You can often find financing sources in the deal itself. This is part of bootstrapping yourself to success.
8. Buy low, sell high or, put another way, buy whenever everyone else is
selling and sell whenever everyone else is buying. Have the courage of
your convictions.
9. Remember: entrepreneurs would rather ask for forgiveness than beg for permission.
Reading Entrepreneurs Handbook II you will learn (among other things) how to:
-Select the right idea for your next startup, product, service, app, campaignm what have you…;
-Create business models for the 21st Century that produce great results: so that the harder you work, the more money you make;
-Add differentiated value, i.e., ‘pixie dust’ to your business model;
-Create a compelling value proposition and learn how to clearly
demonstrate it to customers and clients, managers and Boards of
Directors;
-Self-capitalize (bootstrap) your new
enterprise/product/service/campaign which will give you independence and
creative control as well as, in certain circmstances, ensuring that you
end up owning it not a VC firm or other investors or partners;
-Find free or inexpensive startup capital in the deal flow, from clients
or customers, from suppliers or from anyone else who stands to benefit
from your success;
-Use smart marketing (guerrilla marketing and social marketing) so you can acquire customers and clients cost effectively;
-Mass customize products and services using the Internet so that, for
the first time in history, you can get custom outputs from standard
inputs;
-Reverse out some of the work to your clients, customers, suppliers and
marketing channel partners using the Internet so that you create a
scalable enterprise that can produce more value than if you had a JOB;
-Add intelligence to your business model so that you can match client
needs to supplier abilities by introducing an Internet ‘brain’ into your
enterprise’s ecosystem—this will make even mundane service businesses
scalable for the forst time ever;
-Find pre-launch and launch customers using negative cost selling
techniques and outstanding value propositions to sell, sell, sell;
-Execute expertly;
-Innovate and improve constantly;
-Make your own rules;
-Get sponsors, strategic partners and others ‘intricated’ into your
model to leverage your marketing spend and also to provide you with some
additional capital;
-Learn how to use negative cost marketing and co-branding to deliver
your message and capture customers integrating them in your processes;
-Exercise leadership;
-Use social media and other Internet tools including cloud computing to
reach world markets effectively and inexpensively, using applications
that were previously only available to large businesses;
-Compete effectively with hard charging entrepreneurs from China, India
and other Tigers by having a business model that cannot be easily
duplicated or dislodged and around which a community forms that will
provide you with a lasting, sustainable competitive advantage,
concession and franchise.
-Study new enterprise formation and analyze case studies to learn what others did right and what they did wrong.
So what we are going to do together in the next few hundred pages is
to take you on a voyage to create the most compelling business models
for the 21st Century. We are going to look deep into the past (as far
back as the beginning of trading economies circa 10000 B.C.) as well as
show you models from the decade past and the new one we are currently in
that may amaze you—ones that generate cash on three sides (not only
getting cash from customers but from suppliers and marketers too). You
will learn how it is now possible to reverse out much of your work, to
create mass customization in products and services, turn products into
services and vice versa, engage in negative cost selling and negative
cost marketing and much more.
“You can think your way to wealth a lot faster than you can work your way there,” Prof Bruce, Winter 2012.
…
ps. to read the Handbook’s Dedication, please read: https://www.eqjournal.org/?p=3251.
Prof Bruce @ 9:16 am
Edit This
Filed under:
25 Steps to Business Success
and
Art and Architecture
and
Bootstrap Capital
and
Bootstrap Entrepreneurs– Case Studies
and
Entrepreneur Skill Set
and
Financing
and
Franchise and Concession
and
Marketing
and
Mentoring
and
Personal Business for Life, PB4L
and
Pre-selling, Finding New Clients, Keeping Existing Ones
and
Rules? There are no rules in entrepreneurship.
and
Sell
and
Social Marketing
and
Work/Life Balance
No Comments
Lost Knowledge
Posted on
Friday 27 January 2012
Are we losing the skills of the greatest generation ever?
Recently I had the chance to interview Len Anderson, young dynamic
founder and CEO of Ottawa-based Renaissance Repair and Supply (https://www.renrns.com). You can hear his interview on the FirestoneClarkReport.org (https://www.blogtalkradio.com/firestoneclarkreport/2012/01/25/len-anderson–ceo-renaissance-repair-supply).
Len bootstrapped this business to $10m per year in sales in three years
starting with a credit card with a $20,000 limit. They are on their way
to $100m per year in sales in just a few years.
His secret? Major telecoms have installed tens of billions of dollars
worth of networking equipment since the 1970s that would be
prohibitively expensive to tear out and replace with more modern stuff.
But the people and some of the suppliers (Nortel comes to mind) are gone
or going and these systems are now legacy ones– that is, they’re
orphans.
What Renaissance does is it finds old engineers, old spare parts and refurbishes both
for clients that aren’t just North American, European or South American
ones but Chinese suppliers too who have to fix or maintain embedded
technology in networks they now manage and supply. Where better to find
those old guys than Ottawa, where thousands of engineers have been laid
off by…Nortel. So DEMAND is everywhere and SUPPLY (of engineers who know
the old equipment well) is plentiful (in Ottawa).
Like Pythian (see: https://www.eqjournal.org/?p=2482),
every time a Hewlett Packard or Cisco declares a product to be a legacy
one (i.e., they won’t or can’t support it anymore), Renaissance claps
their hands– more customers for them!
A couple of years ago, I gave a speech for a Chamber of Commerce called Lost Knowledge.
As maybe the greatest generation ever fades from the scene, are we
losing their amazing knowledge forever? Here are my slides of that
speech:
Prof Bruce
Postscript: not only are we not doing enough to preserve human skills
of the past, as my slides point out above, our data storage is almost
as bad as where and how we store nuclear waste. The information that we
are prodigiously producing and storing on digital media will all likely
perish. To this day, the longest lasting data storage we have yet to
devise (save and except certain gold records flying onboard Voyager *)
is acid-free paper. Try reading 8-track recordings or reel-to-reel tape.
For more on this subject, please see: https://www.eqjournal.org/?p=892.
(* Voyager will take 40,000 years just to get near Gliese 445, so
these phonograph records have to be playable for a long time in order
for an interstellar intelligence to one day learn anything about Earth
from them.)
Voyager Golden Record Front Cover
Prof Bruce @ 7:55 am
Edit This
Filed under:
Asymmetric Information
and
Bootstrap Entrepreneurs– Case Studies
and
Business Models
and
Entrepreneur Skill Set
and
Franchise and Concession
and
Future Vision and Technology
and
Human Resources
and
Intellectual Property
and
Livable Cities and Neo-Urbanism
and
Personal Business for Life, PB4L
and
Pixie Dust
and
Political Economy
and
Value Differentiation and ‘Pixie Dust’
and
Value Proposition
and
Writing, Research and Experimentation
No Comments
Institute of Entrepreneurs
Posted on
Thursday 26 January 2012
Introduction
Exploriem.org is launching the Institute of Entrepreneurs (IOE) this
year. Why? To bring advanced research, education and mentoring to
student entrepreneurs and intrapreneurs from self-capitalized and
forward-looking enterprises across Canada and around the world. IOE
provides access to research, education and a network of high achievers
that you just can’t get anywhere else.
The idea is to focus either on bootstrapped organizations—for-profit,
not-for-profit, charities and NGOs—or well established enterprises that
are launching new initiatives/products/services and want them to be
more self reliant, closer to the customer and innovative. IOE courses
are indeed intended for anyone who needs to be efficient and effective
in their operations. The concept is to equip them with best practices in
business models, guerrilla marketing/market research, social marketing,
self-capitalization, negative cost selling, negative cost marketing,
value proposition, sponsorship, product management, real estate, cash
conversion cycle and pricing model.
IOE equips its students with an entrepreneur’s skill set—to do
everything in parallel, to be creative and innovative, to find launch
and pre-launch clients, to raise funding in clever ways, to retain
control of their enterprises over the long haul, to build wealth and
independence and to creditor proof themselves too. IOE does this in a
collegial, supportive way and connects student entrepreneurs to a high
energy cohort of ultra talented people.
To support the mission, IOE provides courses in the following areas:
• IOE5100 Advanced Business Models for Entrepreneurs and Intrapreneurs (MBA level)
• IOE3100 Entrepreneurialist Culture – How to Bootstrap Yourself to Success in the 21st Century (3rd and 4th year equivalent)
• IOE3200 – How to Find Sponsors for Practically Anything
• IOE3300 – Real Estate and Development
• IOE3300 – Turn Selling Into Buying
• IOE4100 – Design Economics
• IOE5200 – Advanced Product Management
More About IOE5100 Advanced Business Models for Entrepreneurs and Intrapreneurs
Come to beautiful Dominican Republic to an all-inclusive resort to study with Prof Bruce from March 18th to March 25th, 2012.
In just one week (six lectures), you will learn/study and do the following:
L1, Monday March 19th, Lecture 9 am to Noon, followed by one hour
workshop/Business Modeling in the 21st Century—Integrating the Internet
into the DNA of your Enterprise.
L2, Tuesday March 20th, Lecture 9 am to Noon, followed by one hour
workshop/Case Studies of Self-Capitalized Enterprises—Creating Powerful,
Innovative Value Propositions and Sustainable Competitive Advantage
through Differentiation. Creating and Improving new products and
techniques in existing established companies.
L3, Wednesday March 21st, Lecture 9 am to Noon, followed by lunch break and afternoon adventure tour
(1:30-5:30pm)/ Self-Capitalization for the Modern Enterprise—You are
never too big a company to use Bootstrap Financing techniques.
L4, Thursday March 22nd, Lecture 9 am to Noon, followed by one hour
workshop/Turn Selling into Buying—Effective Customer Acquisition using
Negative Cost Selling, Guerrilla Marketing, Social Marketing and Earned
Media.
L5, Friday March 23rd, Lecture 9 am to Noon, followed by one hour
workshop/Corporate Organization and Structure for Entrepreneurs,
Intrapreneurs and high level management—Creditor Proofing Yourself.
L6, Saturday March 24th, Student presentations 9 am to Noon, celebratory dinner 6:30 to 9:00 pm with prizes/surprises
Learning Outcome
What we are going to do together in a week is to take you on a voyage
to help you create the most compelling business models for the 21st
Century. We are going to look deep into the past (as far back as the
beginning of trading economies circa 10,000 B.C.) as well as show you
models from the decade past and the new one we are currently in that may
amaze you—ones that generate cash on three sides (not only getting cash
from customers but from suppliers and marketers too).
You will learn how it is now possible to reverse out much of your
work, to create mass customization in products and services, turn
products into services and vice versa, engage in negative cost selling
and negative cost marketing and much more.
Outputs
You will complete these assignments:
A. Build/Improve/Adjust your Business Model (50%)
B. Produce and record your 2-Minute Elevator Pitch on YouTube (if public) or otherwise (if private) (20%)
C. Present your Business Model (30%)
Ten Reasons to Attend IOE5100
Are you a talented entrepreneur, intrapreneur, 3rd, 4th or MBA-level
student, product manager, executive, supply chain manager, high level
manager/executive or enterprise founder? If so, here are ten reasons why
you or someone from your organization should take this course:
1. Receive an IOE Certificate for course work in a condensed one-week period.
2. Create and improve your Business Model so the harder you work, the more money you make.
3. Craft and improve on your value proposition and then turn it into a fantastic elevator pitch and YouTube viral hit.
4. Learn and expand your knowledge about self-capitalization for modern
enterprises, effective customer acquisition using Negative Cost Selling,
Guerrilla Marketing, Social Marketing and Earned Media.
5. Take advantage of personal mentoring by Prof Bruce during the retreat
as well as a 6-month and 1-year follow up with Prof Bruce! Access to
IOE Newsletter only available to former IOE students.
6. Surround yourself with competitive individuals who share your passion for entrepreneurship and intrapreneurship.
7. Learn the entire entrepreneur skill set—A to Z.
8. Take a one-week, learning, guilt-free vacation and escape deadly winter.
9. It’s held in friendly Dominican Republic! All inclusive hotel / airfare / transfers / adventure tour / cool takeaways (Entrepreneurs Handbook, YouTube Elevator Pitch, Biz Model, Graduate Certificate, Commemorative Collectible Institute Pin and advance/signed copy of Quantum Entity, a novel about an extraordinary group of young people who found a globe-spanning tech company*).
10. It’s cost effective-special introductory price. It’s world class. It’s team building. It’s adventure. It’s fun.
(* To read the Foreword of Quantum Entity, please go to: https://www.eqjournal.org/?p=2932.)
Takeaways
Here’s what you will take away from IOE5100:
A. Entrepreneurs Handbook II (Read the Foreword here: https://www.eqjournal.org/?p=3179)
B. Student Entrepreneur Business Model
C. 2-minute Elevator Pitch video on YouTube (if public) or unlisted (if not)
D. Masters-level Certificate and Commemorative Collectible Institute Pin
E. Advance copy of Quantum Entity, a novel written by Prof Bruce to be released in 2012 and signed by the Author together with your very own Worry Doll**
(** Excerpt from Quantum Entity re. Worry Dolls: https://www.eqjournal.org/?p=2939.)
Follow up Mentorship
IOE provides each of its students with 6-month and 1-year individual follow ups with Prof Bruce.
More about Prof Bruce
Dr. Bruce M. Firestone, B. Eng. (Civil), M. Eng.-Sci., Ph.D., is perhaps
best known as Founder of the Ottawa Senators and Scotiabank Place. In
May of 2006, Dr. Firestone joined the University of Ottawa’s Telfer
School of Management as its first Entrepreneur-in-Residence. In
addition, Dr. Firestone is a licensed Real Estate Broker and Mortgage
Broker with Century 21 Explorer Realty Inc. Dr. Firestone is also known
for his work as Executive Director of Exploriem.org, a Canadian
Registered Not-For-Profit corporation focused on educating and mentoring
entrepreneurs and intrapreneurs in Canada and around the world.
Dr. Firestone advises clients on business modeling, self-financing,
smart marketing, differentiated value, harnessing the Internet, real
estate and other issues related to entrepreneurial companies and
organizations. Prof Bruce has launched or helped to launch more than 165
startups in fields including tech, real estate and services.
Dr. Firestone received his Bachelor of Civil Engineering degree from
McGill University in Montréal; his Master of Engineering-Science
(Traffic and Transportation) from the University of New South Wales in
Sydney and his PhD in Urban Economics from the Australian National
University in Canberra. He has also studied or taught at Laval
University, Harvard University, University of Western Ontario and
Carleton University as well as the University of Ottawa.
Dr. Firestone is married with five children. He supports numerous charities.
Prof Bruce has been an operations research engineer, a real estate
developer, a hockey guy, a professor of architecture, engineering,
business and entrepreneurship, a real estate and mortgage broker, a
founder of two not-for-profit organizations, writer and novelist and, of
course, a peerless husband and father of five great kids.
You can follow him on Twitter at: www.Twitter.com/ProfBruce and read his blog at: www.EQJournal.org.
Special Introductory Price
Costs for the course, airfares, accommodation, meals, transit and adventure tour as well as all takeaways and outputs are:
$1,295.00 USD/CAD + HST for travel, transfers, adventure tour, hotel and all inclusive meals and drinks, double occupancy.
Add $200 + HST for single occupancy.
Includes air travel to and from resort from Ottawa, Canada.
Course cost is $585 for students or not-for-profits/charities/NGOs and $835 for everyone else + HST.
A limited number of scholarships are available.
Pre-Admission and Pre-Preparation
To apply for admission and prepare, you need to do the following:
1. Provide us with two reference letters; one personal and one from a past employer.
2. Take the ECQ Test (https://dramatispersonae.org/ECQTest/ECQ(ns)TestAuto.htm) and send us your score.
3. Please read: Twitter Nation (https://www.eqjournal.org/?p=2080), Personal Business for Life, PB4L: The Road to Financial Security and Independence (https://www.eqjournal.org/?p=2020) and The Complete Business Model (https://www.eqjournal.org/?p=692).
4. Run your preliminary business model (the one you would like to work
on during the course) through our online utility, the Business Model
Generator (see: https://dramatispersonae.org/BusinessModels/BusinessModelGeneratorLandingPage.htm and https://www.dramatispersonae.org/bmg/) and bring the outputs with you.
5. Provide us with a link to your
Twitter/Blog/YouTube/Business/Facebook/LinkedIn and other relevant
social media tools. If you don’t have one, get a Twitter account and
follow @Prof Bruce and @exploriem as well as @tclscholtes. Twitter is the fastest way to integrate you to a worldwide, learning network of entrepreneurs and intrapreneurs.
6. Record a 2-minute Elevator Pitch* and put it on YouTube (public or
unlisted) Your pitch is the product/idea you or your company would like
to develop and launch to complete or improve your business model and
increase revenue. To improve your value proposition and elevator pitch,
please read: How to Make an Elevator Pitch (https://www.eqjournal.org/?p=339) and Elevator Pitch Workshop (https://www.eqjournal.org/?p=361).
(* You will compare your preliminary business model and your initial
2-minute Elevator Pitch with the final ones you will create during the
course—to measure your progress and evaluate outcomes.)
Testimonials
“Basically, you can’t be running a startup in Ottawa and not have
benefited from Prof Bruce’s wisdom in some way. His credentials would
take a whole page to write but in a nutshell, he is Founder of the
Ottawa Senators, is Executive Director of a business incubator called
Exploriem.org and with his knowledge and experience he is one of the
best advisors I ever had!” Vahid Jozi.
“This course filled a hole in the MBA program – business modeling is
an essential skill for all MBA grads regardless of whether he/she is an
entrepreneur or manager. The experience was enhanced by Prof. Bruce’s
innovative teaching style. Of the 20 MBA courses I’ve taken, this one is
in the top two!” J. Krenosky.
“Startup DNA was different from any MBA course I have taken to date.
It provided me with both a practical understanding and creative outlook
on the how to’s of building a business model. Prof Bruce equips you with
the knowledge and the courage to stop ‘thinking’ about entrepreneruship
and start ‘doing’ it – all the while reviving your entrepreneurial
spirit. Thank you Prof Bruce!” Ziad Geagea
“Entrepreneurialist Culture is invaluable to anyone interested in
becoming an entrepreneur, intrapreneur or wants to create a start-up and
reap the benefits. It forces you to think in business models,
relationships and ecologies, to take ideas and turn them into strong
value propositions for individuals, and to stand alone; looking at a
market and measuring yourself in the success you create with your ideas,
determination and leadership. You don’t only learn how to work hard,
but how to reverse out the work as well. It changes the way you think
about business and the possibilities beyond just a carrier, but a way of
life and thinking,” Craig Schoen.
What Steve Jobs and Sam Palmisano Think about Biz Models
Steve Jobs
Steve Jobs figured out how important biz models are before he
launched the iPhone when he insisted that AT&T* give him a share of
their subscriber revenues in return for a two year exclusivity on the
device. With that, he revolutionized yet another industry’s biz model.
Cell phone manufacturers went from selling a ’shrink wrapped’ gadget for
a one-time payment in a brutally competitive market with poor margins
that was racing to the bottom to an industry with multiple sources of
revenues (ads on the iOS platform, iTunes downloads, app store sales and
revenues, search fees, streaming, subscriber revenues, sale of the
device itself), some of which are recurring: the holy grail of techdom.
(* Wired.com (https://www.wired.com/gadgetlab/2012/01/iphone-att-q4-sales)
reports that the iPhone represented 80% of all AT&T smartphone
activations in the last quarter of 2011 during which they added 9.4
million new subscribers, 50% more than in any previous quarter in
company history. We estimated that the iPhone is returning a phenomenal
288% p.a. to Apple making the platform and the device perhaps the single
greatest tech profit generator ever. Please see: https://www.eqjournal.org/?p=1714.)
Sam Palmisano
Sam Palmisano, when he was CEO of IBM told BusinessWeek (April 3rd,
2006) why he places a great deal of emphasis on the importance of
business model innovation. He said: “…with product innovation, it’s a
certainty that your competition is shortly going to copy what you have
done. With business-model innovation, though, if you can come up with a
unique way of doing things, it’s much tougher to react to.” Mr.
Palmisano spent approximately 40% of his time as CEO on IBM business
models.
For More Information about the Course about IOE
Ms. Theresia C.L Scholtes
Assistant Manager
Exploriem.org
LINCOLN FIELDS SHOPPING CENTRE, 2525 CARLING AVE, SUITE 23, OTTAWA ON K2B 7Z2
Tel.: 613.422.6757 ext. 204 Fax: 613.422.2807
Internet: Exploriem.org/about-us/institute-of-entrepreneurs-mission/ioe/
Twitter: https://twitter.com/tclscholtes
Comparables from Schulich Executive Learning Centre
Masters Certificate in Business Analysis/Program Fee:
$9,450 CDN + applicable taxes
Program fee includes full 9-module program tuition, all teaching
materials, iPad 2, lunches, and refreshments. Schulich Executive
Education Centre’s liability is limited to reimbursement of paid tuition
fee.
Masters Certificate in Supply Chain and Logistics Management/Program Fees:
• SCL members: $10,550 CDN + Applicable taxes
• Non-members: $10,950 CDN + Applicable taxes
• Program fee includes program tuition, teaching materials, lunches and refreshments.
• It also includes a six-month membership in Canada’s leading supply
chain & logistics association – SCL Canada – for non-members who
register.
• Schulich Executive Education Centre’s liability is limited to reimbursement of paid tuition fee.
Location:
Schulich Executive Learning Centre, 4700 Keele Street, Toronto, Ontario
Prof Bruce @ 4:29 pm
Edit This
Filed under:
25 Steps to Business Success
and
Bootstrap Entrepreneurs– Case Studies
and
Business Models
and
Cash Conversion Cycle
and
Courses
and
Creativity and Value
and
Creditor Proofing
and
Customer Service
and
Differentiated Value
and
Elevator Pitch
and
Entrepreneur Skill Set
and
Ethics
and
Financing
and
Franchise and Concession
and
GTBMR
and
Guerrilla Marketing
and
Guerrilla Marketing Research
and
Institute of Entrepreneurs
and
Intellectual Property
and
Internet– the Internet is Eating a Hole in the Global
and
Intrapreneurs and Intrapreneurship
and
IRR
and
Launch Clients
and
Leadership
and
Marketing
and
Mentoring
and
Negative Cost Value Proposition
and
Not-For-Profits
and
Personal Business for Life, PB4L
and
Pixie Dust
and
Pre-selling, Finding New Clients, Keeping Existing Ones
and
Pricing is an Art
and
Product Management
and
Rules? There are no rules in entrepreneurship.
and
Sell
and
Social Marketing
and
Social Media
and
Sponsorship
and
Spreadsheet Use
and
Value Differentiation and ‘Pixie Dust’
and
Value Proposition
and
Why Businesses Fail
No Comments
Can You Create Successful TV Programming from a Home Base in Ottawa?
Posted on
Tuesday 24 January 2012
(Portions of this article originally appeared in Ottawa Business Journal, Jan. 23, 2012: https://www.obj.ca/Opinion/Bruce-Firestone-5444.)
I recently interviewed screenwriter Sharon Buckingham best known as writer/producer and creative force behind Sticks & Stones,
a movie for television for the CTV network. It won both the Shaw Rocket
Prize for Best Canadian Family TV program and Best Foreign Film at the
International Family Film Festival and was nominated for Gemini and
Canadian Indy Awards as best movie for television. Her feature film
credits include Genie Award Best Picture nominee To Walk With Lions
starring Richard Harris and she worked as story editor and writer on
the long-running US/Canada television series Beastmaster. Sharon
currently makes Ottawa her home base although she is frequently going
down the road to Toronto and LA.
BMF: Sharon, you’ve experienced everything including the high of
living on three acres on Mulholland Drive in LA to, well, the lows that
come by just being in the business. I mean everyone is a critic. So how
do you cope with the highs and lows of your business and what advice can
you give entrepreneurs, artpreneurs, writers and artists?
SB: Someone once said: “Dream big, start small” and that still seems like good show business
advice to me. Even your smallest and earliest successes are stepping
stones that will take you to bigger accomplishments. Building
relationships is key because making a movie or a television series is a
truly collaborative effort and people want to work with people they
know, like and trust.
Sharon Buckingham
BMF: Reality television has kind of taken over TV-land. I know you
are working on some projects in the field. Can you share one or two of
these with us?
SB: I can’t share specifics but I can say that I’ve recently had to
give up on one project I thought had tremendous potential both here in
Canada and internationally because I discovered that financing reality
programming in Canada is nearly impossible. At this time, the two
principal financing sources for television programming are: the Canadian
Television Fund and tax credits. Neither allow funding of programs that
contain “…aspects such as, but not limited to, prizes, awards,
contestants, game show elements, or reality television elements.” What
this means is that even if a Canadian production company comes up with a
successful show format along the lines of a Survivor, Amazing Race or The Apprentice,
for example, they can’t find money from traditional Canadian sources of
financing necessary to produce the show. They would also be unlikely to
find a broadcaster willing to air it because under present CRTC policy
guidelines, any program with a competition component does not qualify as
‘priority programming’. The exception is “Canadian amateur talent
competitions in the field of artistic expression.” Given this, Canadian
broadcasters fill their non-priority time slots with American shows that
cost less to acquire.
BMF: Well, it’s been my view for a long time that the CRTC represents
the dead hand of regulation hurting Canadian talent. You’ve just
confirmed it.
SB: I didn’t exactly put it that way.
BMF: Right. Let’s move on then. What was the one ‘can’t miss’ project or idea that did?
SB: I’m such an optimist I always and inevitably believe that
whatever I’m working on at the moment is a ‘can’t miss’ idea. It’s also
true that I never count a project out. Sometimes the reason a ‘can’t
miss’ project hasn’t sold is because the timing’s not right or there’s
some other factor that has nothing to do with whether the idea is any
good or not. I always remind myself that eight publishers rejected J.K.
Rowling’s first Harry Potter book before it was picked up by Bloomsbury Press for a reported £2,500 advance, Every major Hollywood studio rejected Raiders of the Lost Ark before Paramount agreed to finance the production.
The rule of thumb in this business is that for every hundred ideas
for a television show or feature film, only ten will get to the
development stage and of those ten, only one will make it all the way to
production. That’s a one in a hundred shot and while it’s true I’ve
beaten the odds so far, a couple of my ‘can’t miss’ ideas are ‘resting’
in my file cabinet until, as I tell myself, the timing’s better.
BMF (laughing): I have quite a few of those myself. There’s been a
lot of criticism of Hollywood over the years for producing lousy
writing. With all the smart people running around, how come there aren’t
more Cameron Crowes (Almost Famous, Jerry McGuire) and Aaron Sorkins (A Few Good Men, The American President, The Social Network)?
SB: My best guess is that getting a movie or television series made
has more to do with what those doing the financing and distribution
think audiences will pay to see and what marketing people think they can
sell than it has to do with the quality of the writing.
BMF: What advice would you give a fledgling Canadian screenwriter who
is trying to get into the TV or film biz? Do they need an Agent, for
example and, if so, how would they get one?
SB: Before any practical advice, let me just say this: if you can’t
take rejection, you need to find another outlet for your creativity. If
you’re someone who can take rejection and you have a healthy ego then you’ll need to ‘armor up’ because you’ll be tested.
Okay, with that out of the way, what you need to get into the TV or
film biz is a first rate writing sample. People who want to work in
features need to write an outstanding spec feature script. Those who
want to work in TV need to write a sample episode of a show that’s
presently on air. Writing a terrific sample script may not take the
10,000 hours that Malcolm Gladwell claims is key to success but it will
take some time. Many cities, including Ottawa, offer workshops and
courses in screenwriting. Algonquin College, for example, has a highly
respected screenwriting program.
And yes, you do need an Agent because most production companies and
producers will not look at unsolicited material. Period. They will look
at material an Agent recommends because they are the industry’s
gatekeepers. Agents put years into developing and maintaining contacts
that a writer needs. They know which broadcasters and producers are
looking for what kind of material. They get your work out to those who
can see a project through all the hoops. They set up meetings and they
negotiate deals. Some of them will even edit your work and all of them
will critique it. But a good Agent will do more. A good Agent will give
you emotional support during the lean times and a ‘there, there’ when
you’re feeling down on yourself or questioning your talent. An Agent is
your ally and your protector. You won’t get anywhere in this business
without one.
Like good writing, getting an Agent takes time and effort. The
standard approach is to first get a list of Canadian agents. The Writers
Guild of Canada’s website (https://www.wgc.ca)
offers a list of Canadian agents. Once you have what you consider to be
your best effort at writing a feature script or an episode of a
television series, you can send an email query to each of these agents
describing your background, any credits you may have, a brief
description of the writing material you want them to look at and ask
them if you can send them a sample script for their consideration. Then
you wait. It can take eight to ten weeks for an agent to respond to your
email. Or never. Some will get back to you right away, but
unfortunately in that case likely to say only that they don’t represent
new writers.
Of course, if you know someone who already has or knows an agent you
can short-cut the process and ask for an introduction. But even if the
introduction is made, you’ll still be asked to submit a writing sample.
BMF: If you could name just three top film or TV screenwriters over
the last 25 years who would they be and what was their best work?
SB: My top pick is Aaron Sorkin. I like anything he writes so it’s
difficult to narrow it down, but I think his West Wing television series
is still one of the best ever and A Few Good Men and The Social Network are two of my favorite films. William Goldman is also tops in my book. The Princess Bride and Butch Cassidy and the Sundance Kid are classics. I also like Charlie Kaufman. His first mainstream movie was Being John Malkovitch
and when I came out of the theatre I remember thinking: “Wow. This guy
is good!” I guess Hollywood thought so too because that screenplay won
an Oscar nomination and he went on to write many more wonderful scripts
including the Oscar winning Eternal Sunshine of the Spotless Mind.
BMF: If you could do one thing over again in your career, what would it be?
SB: I don’t know how to answer that question. I consider that I’ve
had a successful career, at least on my terms, and I think many people
would agree so I don’t know that I would change or do over anything
much. I’ve been privileged to meet amazing people and explore, learn and
write about subjects that interest and appeal to me. Different projects
have given me the opportunity to travel and live and work for periods
of time in Europe, Africa and Australia. It’s possible I’d have had a
more financially successful career if I’d put more time in on the
business side, if I’d been more ambitious, if I’d chosen to continue to
live in California but money alone has never been a good enough
motivator for me. I want to be fairly compensated of course but what
drives me and by extension my career, is the seduction of the writing
and creative process and the joy of working with others who have the
same passion for the work and for a project. I like the freedom and
autonomy that goes with being a freelance writer/producer and that I can
choose the kinds of projects I feel have a positive contribution to
make and turn down those that don’t.
It’s also true that some of my choices…and that includes moving back
to Canada…have been made not for business but personal reasons, allowing
me to spend more time with my family and that’s definitely something I
wouldn’t change for anything.
Professor Bruce M. Firestone, Entrepreneur-in-Residence, Telfer
School of Management, University of Ottawa; Founder, Ottawa Senators;
Executive Director, Exploriem.org; Broker, Century 21 Explorer Realty.
Blog: www.eqjournal.org Twitter: www.Twitter.com/ProfBruce
Prof Bruce @ 2:55 am
Edit This
Filed under:
Art and Architecture
and
Awards
and
Design Economics
and
Intellectual Property
and
Livable Cities and Neo-Urbanism
and
Marketing
and
Personal Business for Life, PB4L
and
Political Economy
and
Sell
and
Value Proposition
and
Work/Life Balance
and
Writing, Research and Experimentation
Session expired
Please log in again. The login page will open in a new tab. After logging in you can close it and return to this page.